Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that the following equations characterize a large open economy: (1) Y = 5,000 (2) Y = C+1+G+NX (3) C=1/2(Y-1) (4) 1 = 2,000-100r (5)

image text in transcribed
image text in transcribed
Assume that the following equations characterize a large open economy: (1) Y = 5,000 (2) Y = C+1+G+NX (3) C=1/2(Y-1) (4) 1 = 2,000-100r (5) NX = 500 - 500 E (6) CF=-100r (7) CF = NX (8) G= 1,500 (9) T= 1,000 where NX is net exports, CF is net capital outflow, and & is the real exchange rate. Solve these equations for the equilibrium values of C is S , I is S , NX is , CF is S , r is %, and & is (Hint: You can reduce the total number of equations to two through repeated substitutions. These two equations will be functions of r and s. Check your work by seeing that all of these equations balance, given your answers.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

E Marketing

Authors: Raymond Frost

7th Edition INTERNATIONAL EDITION

0132953443, 978-0132953443

More Books

Students also viewed these Economics questions

Question

Do these investments have much in common?

Answered: 1 week ago

Question

Do not go, wait until I come

Answered: 1 week ago

Question

Pay him, do not wait until I sign

Answered: 1 week ago